Tossing a goodie to the friendly government of Jamaican Prime Minister Edward Seaga, the United States has added the struggling Caribbean nation to the short list of countries where Americans can go for business meetings and deduct the expenses from their taxes.
An amendment to the tax treaty between the United States and Jamaica, which took effect last month, made the expenses of conventions and business meetings held in Jamaica tax deductible as if the meeting had been held in the United States. Only Canada and Mexico had such status previously.
Jamaica, which has made the rebuilding of tourism a top priority, has begun advertising the tax break in publications aimed at business travelers. A full-page ad in the new Business Week magazine announces "The Great Jamaica Tax Break."
Seaga inherited a grim economic legacy when he replaced the left-leaning prime minister Michael Manley in November 1980. The unemployment rate was over 27 percent, and tourism, a mainstay of the economy, had fallen into disarray as the island developed a reputation for violence, high prices and poorly managed government-owned hotels.
Seaga was President Reagan's first foreign guest, and the Reagan administration has promised aid to the free-enterprise, anti-Cuban Seaga government.
The tax agreement, ratified by the Senate in December, allows U.S. citizens to claim tax deductions for conventions and business meetings at Jamaican resorts. According to tax analysts here, it is the only tangible tax change to emerge thus far from the administration's effort to stimulate the economies of friendly Caribbean nations through tax incentives and customs exemptions.
Treasury Department officials said they expected the impact on U.S. tax revenues to be minimal. "These conventions would only go to Acapulco anyway if they didn't go to Jamaica," one said.
Jamaican Tourism Minister Anthony Abrahams said last week that the effort to rebuild the tourist industry is succeeding.